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Market Overview

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The Vietnam construction market was valued at approximately USD 616 million in 2021, with a projected growth rate of 5.88% during the forecast period (2021-2028). By 2028, sales are expected to reach 6,869 units. The growth in construction equipment is primarily driven by the government’s increased investment in public infrastructure, housing development, and renewable energy projects.

Within the construction equipment market, the material handling segment claims the largest share in Vietnam. This can be attributed to the growth of the manufacturing and construction industries, with forklifts being the most prominent equipment in this segment.

Following material handling, the earthmoving segment holds the second-largest market share. Backhoe loaders are particularly popular due to their extensive use in civil work and urban development projects, especially in Ho Chi Minh City and Hanoi. These loaders offer flexibility in operations on challenging terrains, such as muddy or uneven surfaces, making them more favored than excavators in Vietnam’s earthmoving equipment sector.

In 2022, the government plans to invest $120 billion in public infrastructure, which is expected to drive a 6% growth in the construction industry. Additionally, the real estate sector experienced a 4% growth in 2021, and a similar trend is anticipated for 2022. The country’s manufacturing sector also grew by 6.3% in 2021, benefiting from the relocation of manufacturing bases from China to Vietnam’s northern region due to lower business setup costs.

Furthermore, the government’s focus on renewable energy resources is anticipated to attract investments and foreign direct inflow into the renewable energy sector in 2022. The demand for mini excavators and cranes is expected to rise due to the increasing number of solar and wind farm projects aimed at achieving carbon neutrality by 2050.

Vietnam’s economy demonstrated resilience, achieving 2.9% growth in 2020. The robust performance of the manufacturing and export sectors offset the negative impact of COVID-19. In 2021, the government’s investments in various sectors such as real estate, construction, mining, power, information technology, and education are expected to stimulate economic activities, resulting in a projected 6.3% growth in the construction industry.

According to IMF forecasts, Vietnam’s economy is expected to grow by 6.5% in 2022, making it one of the fastest-growing economies in Southeast Asia. Government initiatives to reduce taxes on imported raw materials and lower land rental costs are anticipated to positively impact the manufacturing industry.

Vietnam ranked 70th in ease of doing business in 2021. The country has a competitive advantage over other Southeast Asian nations due to its low-cost business setup, affordable labor, and tax incentives provided by the government. This has led to significant growth in industries such as electronics, textiles, garments, and leather, driven by increased demand.

While FDI inflow in Vietnam experienced a slight decline of 1.2% in 2021 due to a slow economic recovery, the government expects a strong market recovery and high FDI inflow in 2022, particularly in the infrastructure sector. Measures such as low corporate tax rates, tax exemptions for major industries including garment, textile, telecommunication, and electronics, as well as import duty exemptions on raw materials, and reduced land rental fees are expected to attract more FDI in 2022.

The government plans to invest $480 billion by 2030 to upgrade infrastructure, including the establishment of 11 power plants, new highways, and roadways. The Ministry of Transport Vietnam has drafted a road and highways construction plan to interconnect major political centers, key economic regions, seaports, and international airports. Approximately 5,000 kilometers of highway construction are also planned.

The government has allocated approximately $65 billion for road infrastructure investment by 2030, with 48% of total transport industry investment dedicated to road network development. Notable projects such as North-South Express, Long Thanh Airport, Ho Chi Minh City Metro, Hanoi Ring Road, Hai Van Tunnel 2, and Lien Chieu Port Da Nang are currently underway in 2022.

According to the Asian Development Bank, Vietnam is expected to invest approximately 5.7% of its GDP in infrastructure development in 2022. The government plans to increase public investment by 8.3% in 2022, with $22.7 billion allocated for construction projects, including $1.5 billion from foreign sources. There will be a particular focus on enhancing transport infrastructure throughout the country.

In 2022, the industry witnessed a recovery, and there was an increased demand for housing in suburban regions to avoid urban pollution and congestion. Locations such as Bao Loc, Dalat, and Ho Tram experienced growth in housing demand, especially after the pandemic. In 2021, FDI inflow into the real estate industry accounted for 11% of total FDI inflows. Government initiatives aimed at relaxing housing laws under the national housing development plan 2021-2030 are expected to support the country’s housing demands.

Vietnam is one of the fastest-growing economies in Southeast Asia. According to the Asian Development Bank, the country’s GDP is projected to grow by 6.5% in 2022. With an anticipated 11% increase in electricity demand, the government aims to reduce dependence on fossil fuels and transition to renewable energy resources through its climate safety program. The solar generation capacity in Vietnam is expected to exceed 16,500 MW by 2022, supported by government incentives such as tax benefits and subsidies for solar power projects. Similar growth is expected in the wind energy sector, as the Vietnamese government strives to achieve carbon neutrality by 2050.

Government data suggests that at the current production rate, Vietnam’s oil and coal resources will be depleted within approximately 56 to 165 years. The country has limited and scattered reserves of minerals such as iron, manganese, zinc, and lead. However, mining activities in Vietnam have been marred by several problems, impacting various socio-economic aspects. Environmental concerns, including erosion, landslides, biodiversity loss, and pollution of soil, groundwater, and surface water due to mining chemicals, have been a significant issue. Mining in restricted areas and improper techniques are key factors contributing to the declining mineral resources in the country.

Vietnam’s oil and gas production has continuously declined from 16.9 million tons in 2015 to 9.7 million tons in 2020. According to the Vietnam Oil & Gas Group, most oil and gas reserves have already been fully exploited, with no countermeasures in place to prevent further decline. Domestic oil production figures have consistently decreased over the years, highlighting this issue.

In 2021, Vietnam experienced a surge in iron and steel prices, leading to a 30%-40% increase in building material costs, affecting the overall pricing of real estate projects. Asphalt prices rose by 9%-10%, while cement prices increased by 3-5% in the Vietnamese market. Consequently, construction project costs surged by 30-35% in 2021, resulting in delays due to financial constraints. Some contractors were compelled to halt steel-based construction and switch to alternative materials like wood. The construction price index in 2021 increased by 3.65% compared to 2020.

Vietnam is currently facing a severe labor shortage across industries such as construction, manufacturing, and mining. The country heavily relies on migrant workers from Indonesia, Thailand, and Bangladesh. The shortage of labor has prompted an increased demand for advanced construction equipment technologies to enhance worker efficiency and reduce reliance on manual labor. For example, leading construction equipment companies like Hitachi have introduced automation, smart operation technology, and support systems like the Concise Hitachi Comprehensive Machine Management for wheel loaders and excavators. Chinese manufacturer XCMG has also introduced dual excavators in the Vietnamese market, offering flexibility, cost-efficiency, and easy transportability.

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Market Segmentation

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The market is segmented based on various factors, including type and end user.

Segmentation by Type
Earthmoving Equipment – Excavator, Backhoe Loaders, Motor Graders, Other Earthmoving Equipment (Other loaders, Bulldozers, Trenchers)
Material Handling Equipment – Crane, Forklift & Telescopic Handlers, Aerial Platforms (Articulated Boom Lifts, Telescopic Boom lifts, Scissor lifts)
Road Construction Equipment – Road Rollers, Asphalt Pavers

Segmentation by End Users
Construction
Manufacturing
Mining
Others

In 2021, the earthmoving equipment segment accounted for 42.4% of the overall construction equipment market in Vietnam. It is projected that by 2028, this segment will reach an estimated 3,022 units, experiencing a compound annual growth rate (CAGR) of 7.26%. The strong growth can be attributed to the increasing number of infrastructure development projects in key regions such as Ho Chi Minh City, Hanoi, and Da Nang. These projects are expected to drive the demand for earthmoving equipment. Furthermore, the government’s allocation of $120 billion for public infrastructure development in 2021 further supports this trend.

Meanwhile, the utilization of construction equipment in the construction industry end-user accounted for 59.7% of the overall market in 2021. It is estimated that by 2028, the utilization of construction equipment in the construction industry in Vietnam will reach approximately 4,382 units, with a CAGR of 7.72%. This growth is primarily driven by civil engineering activities, including the construction of railways, airports, and roadways. The increased government investments in transport and infrastructure development projects have boosted these activities, thereby driving the demand for construction equipment in the market.

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Competitive Landscape

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Market leaders and established players in the Vietnam market include Komatsu, Hyundai Doosan Infracore, Caterpillar, and XCMG. Chinese manufacturers such as SANY and XCMG have gained popularity recently due to their competitive pricing compared to other manufacturers.

Komatsu, Hyundai Doosan Infracore, XCMG, and Caterpillar collectively hold a significant market share of 46% in Vietnam.

Other prominent vendors in the market include Liebherr, Volvo Construction Equipment, and Hyundai Construction Equipment. Additionally, Zoomlion, Hitachi Construction Equipment, Terex Corporation, and Kobelco are also notable players in the industry.

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Key Questions Answered

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WHAT IS THE GROWTH RATE OF THE CONSTRUCTION EQUIPMENT MARKET IN VIETNAM?

The growth rate of the Vietnam Construction Equipment Market, based on volume, is projected to achieve a compound annual growth rate (CAGR) of 5.88% during the forecast period.

WHO ARE THE KEY PLAYERS IN THE VIETNAM CONSTRUCTION MACHINERY MARKET?

The key players in the Vietnam Construction Machinery Market include Komatsu, Hyundai Doosan Infracore, Caterpillar, XCMG, Volvo, Sany, and Liebherr.

WHAT ARE THE MARKET OPPORTUNITIES FOR PLAYERS IN THE VIETNAM CONSTRUCTION EQUIPMENT INDUSTRY?

Opportunities exist for both new entrants and existing players in the Vietnam Construction Equipment Industry. The growing demand for construction equipment equipped with automation, Internet of Things (IoT), and remote sensing technology is driven by high investments in housing, mining, and infrastructure projects.

WHAT ARE THE NEW INDUSTRY TRENDS IMPACTING THE GROWTH OF THE VIETNAM CONSTRUCTION EQUIPMENT MARKET?

Chinese companies have gained a significant market share in Vietnam’s Construction Equipment Market due to their innovative products, competitive prices, and excellent after-sales services. The introduction of dual excavators has further supported the growth of Chinese companies in the Vietnamese market.

HOW WILL EARTHMOVING EQUIPMENT CONTRIBUTE TO THE GROWTH IN THE VIETNAM CONSTRUCTION EQUIPMENT INDUSTRY?

The increasing number of infrastructure development projects in key regions like Ho Chi Minh City, Hanoi, and Da Nang is expected to drive the demand for earthmoving equipment. The government has allocated USD 120 billion for public infrastructure development in 2021, further supporting this trend. It is estimated that the value of the earthmoving equipment segment in Vietnam will reach $381.7 million by 2028, with a CAGR of 6.40%.